“There are very few instances in history when any government has paid off debt.” – Walter Wriston
Maybe everyone should remember this when talk of the euro comes up again.
The market was hammered again yesterday as all three of the major indexes broke below their 200-day moving averages. We posted a chart of the S&P 500 in our 1pm yesterday and it was clear as day that we were headed lower. All you had to do was look at the yellow line (200-day MA) and the price action around it and you could see where support was going to be taken out.
We also have a trade in our Members Area and our comments on why we were going to continue to hold it open were that there was “blood in the streets and oil in the water” which is another bearish picture we want to paint for you. And there is “ash in the sky” if you want another one to hang up in the office.
All three are happening around the world right now and the market hates uncertainty.
Futures were already pointing towards a lower open yesterday and a couple of our own economic reports didn’t help matters. The Labor Department said new claims for unemployment benefits rose by 25,000 to 471,000, the biggest jump in three months. Wall Street was looking for a decrease to 440,000.
Meanwhile, the Conference Board reported an unexpected drop in its index of leading economic indicators. April was down 0.1% versus calls for a 1% pop.
As a result, the Dow fell 376 points, or 3.6%, to close at 10,068. Unless Moses parts the Red Sea again it looks as though the bulls will not be able to save the Dow from going below 10,000. The index ended below its 200-day moving average for the first time since last July.
In our Weekly Wrap we were targeting Dow 10,200 and said we could fall below 10K. Our early chart work is getting us prepared to a possible drop to Dow 9,000 but we could get a snapback rally any day.
The S&P 500 tanked 44 points, or 3.9%, to finish at 1,071 and we said 1,075 would come into play. If the bears get their way we could also be mentioning this index in the same breath as “triple-digits” as a break below 1,000 could be in the cards.
The Nasdaq got spanked for nearly a “triple-digit” loss as the index fell a stunning 94 points, or 4.1% to settle at 2,204. The Naz found safety above the 2,200 level which was the first wave of support we said could be tested. Get that popular Prince CD out from the 80’s because it looks like 1,999 could come into play.
Futures are pointing towards another lower open this morning: Dow futures are down 84 points to 9,972 while the S&P 500 futures are off by 9 points to 1,061. The Nasdaq 100 futures are lower by 16 points to 1,784.